What is the Net Promoter Score (NPS)?

Net Promoter Score (NPS) is a customer loyalty metric. It measures how likely customers are to recommend a company or product to their friends/family. It is determined by asking a simple question:

“On a scale of 0 to 10, how likely are you to recommend this product/company to a friend or colleague?”

NPS helps businesses gauge customer satisfaction and loyalty. By analyzing these scores, companies can improve in various areas. This might involve refining their products, customer support services, or delivery processes. The goal is to enhance the customer experience and make them more willing to spread the word about your business.

Synonyms

• Customer Loyalty Score
• Customer Satisfaction Index
• Brand Advocacy Rating
• Promoter Feedback Scale
• Customer Advocacy Score
• Loyalty Indicator
• Customer Endorsement Measure
• Referral Likelihood Metric

How Do You Calculate The Net Promoter Score?

You can calculate your Net Promoter Score on a 0 - 10 scale. This is how you can categorize respondents based on their ratings:

• Promoters (scores 9–10): These are your most satisfied and loyal customers. They are most likely to recommend your brand to others. They can be valuable for referrals, affiliates, reviews, and other purposes.
• Passives (score 7-8): Although these customers are satisfied, they are not likely to recommend your brand to their friends. They are also more likely to switch to a competitor.
• Detractors (score 0-6): Customers who are dissatisfied with your brand, and share negative feedback and comments are known as detractors. Discover the issues they have and address them.

This is how to determine your final score:

Deduct the percentage of detractors from the percentage of promoters. The final score can range from -100 (if all customers are detractors) to 100 (if all are promoters).

For instance, if 10% of respondents are Detractors, while 20% are Passives, and 70% are Promoters. Your NPS score would be calculated as: 70-10 = 60. 

Why is Net Promoter Score Important?

Net Promoter Score is crucial because it provides insights into customer satisfaction and loyalty. A high score indicates strong customer relationships. It also shows that your customers might refer you to others. A low score shows areas that need improvement.

What is a Good Net Promoter Score?

There is no exact value of a “good” NPS. It varies depending on the industry. However, there are two common ways to assess your score:

• The Absolute NPS Approach Method: You can compare your score to an undefined benchmark. This means any score above 0 is good.
• The Relative NPS Approach Method: You can compare your score to industry benchmarks. The average Net Promoter Score varies by sector. However, most businesses fall between 31 and 50.

Determining how to consistently improve Net Promoter Score is important. Include an open-ended question at the conclusion of your NPS survey, such as "How can we improve your experience?". This will help you identify areas where your customer experience needs improvement. 

What is a Bad Net Promoter Score?

You can determine bad NPS using the absolute or relative method. Here’s what that looks like:

• Absolute Method: Any score below 0 is bad.
• Relative Method: A score lower than the industry benchmark is bad. 

For example, in retail, a Net Promoter Score below 30 is considered poor, while 30+ is acceptable.

How To Interpret Your Net Promoter Score Results

Net Promoter Scores provides important information about how well your business is performing. It can be used to predict whether your company will expand or collapse. This makes it a useful tool for recognizing and avoiding potential problems.

Here are some ideas for analyzing your NPS data and incorporating it into your business's overall plan:

• Review Data Segments

Analyze the data segments that provided NPS answers. The score may differ for each of the following segments: 

• Age Range
• Gender
• Regular Customers
• Customers with large spending budgets 

Your CRM software will likely include customer demographic data. You can use this information to refine your strategy.

For example, if your Net Promoter Score is lower within a specific age group, it’s a sign that you need to create content tailored to that audience to boost loyalty.

• Track Performance Over Time

Monitoring NPS trends over time helps you identify patterns and changes in customer opinions. This lets you know what’s working.

• Share Feedback Across Relevant Teams

NPS results and customer feedback should be accessible to all relevant teams. This includes marketing, product, sales, and customer support. When all departments are in alignment, efforts to improve NPC become efficient and uniform.

Some ways to share information include:

• Send survey results via your team’s communications channel.
• Report on NPS findings during team meetings and identify problem areas. 
• Build a case study on your customers using NPS data.

• Close The Loop With Customers

Follow up with customers—especially Detractors—to understand their concerns. Consider adding follow-up questions to your NPS survey to get a deeper understanding of their experience.